HM TREASURY News
Release (PN/41/04/08) issued by The Government News Network on 22
April 2008
A discussion paper
on the UK's proposals to reduce the administrative burden on
insurance groups operating in the EU was launched today by the
Treasury and the Financial Services Authority (FSA).
The proposals aim to encourage more effective group supervision
across EU insurers and ultimately provide better value for
consumers. They represent the UK's contribution to the
development of prudential regulation of the EU insurance sector
through the Solvency II process.
A key focus of the Discussion Paper are proposals put forward by
the Chancellor of the Exchequer for the creation of colleges of
supervisors.
Under these proposals EU regulators would work
more closely through supervisory colleges, improving the
effectiveness and efficiency of their supervision of cross-border
insurance and reinsurance groups. The UK Government has proposed
that these colleges would operate for all significant EU
cross-border financial institutions, irrespective of legal form,
providing a structure for the sharing of information and the
cooperation of supervisory authorities in the EU.
The proposals are an example of the Government's
determination to continue in its proportionate and risk based
approach to EU financial services rules that will contribute to
the competitiveness and modernisation of the insurance sector, in
turn bringing benefits to consumers throughout the EU with more
innovative and better value insurance products.
Notes for Editors
1. Solvency II is the project to create a
single risk-based framework for prudential supervision of
insurance companies operating in the EU. Both HM Treasury and the
Financial Services Authority support the Solvency II initiative.
The current European Directives which governing prudential
regulation of insurance firms (now collectively known as Solvency
I) date back to the 1970s. Since then there have been profound
changes in risk management techniques, in capital markets and
especially through the impact of the Basle II Accord on prudential
regulation in the banking sector.
2. The European Commission published its legislative proposal for
the Solvency II framework directive on 19 July 2007. The Solvency
II project will adopt the Lamfalussy arrangements for developing
new EU legislation in the area financial services. This requires a
directive setting out the key principles of the Solvency II
framework which will be implemented through more detailed
legislation. It is expected that Solvency II will come into force
in 2012. Negotiations are currently underway in the Council of
Ministers and the European Parliament on the Solvency II Directive.
3. Insurance groups play a major role in the EU insurance sector.
In 2004 the 20 largest insurance groups operating in Europe
together had a 50% market share of direct insurance business. The
10 largest groups in each EU Member State had a market share of
75% on average for general insurance business and 82% for life
insurance business. (source: Comite Europeen des Assurances,
European Insurance in Figures, June 2006).
4. The UK proposal for the establishment of colleges for all
cross-border financial institutions is outlined in a letter from
the Chancellor to the President of the Council and ECOFIN
colleagues on 3 March 2008. It can be found at: http://www.hm-reasury.gov.uk/media/3/D/ukchxletter_ecofin030308.pdf.
5. Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk.
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